This week in accounting ll we are studying and I need help with the following di
ID: 2541781 • Letter: T
Question
This week in accounting ll we are studying and I need help with the following discussion questions.
Cash
Objectives/Competencies
3.1Reconcile the monthly bank statement.
3.2Record adjusting entries required from the bank reconciliation.
What are some of the transactions that would impact cash? Give some journal entry examples of each transaction type you list.
What are some of the controls we can put over cash that would help prevent errors?
What do you think are the most common cash transactions that occur on a daily basis?
Cash is the companies most liquid asset and is probably the easiest to "hide" items or commit fraud because of it.
What are some other areas of the business that might throw up some red flags like cash does?
Explanation / Answer
Reconciliation of monthly bank statements is done in order to reconcile the transactions which were not promptly entered or in order to settle any differences in the entries.
Adjusting entries are made in order to bring the position to the actual situation as on the given date.
There are several transactions that effect the cash such as cash sales,cash purchases etc.
Cash a/c Dr $ 50,000
To sales a/c. $50,000
(Being cash sales made)
Purchases a/c Dr. $ 67,900
To cash a/c. $67,900
(Being purchased goods for cash )
The above mentioned transactions are the examples of inflow and outflow of cash respectively.
Some of the controls which can be kept over cash to reduce errors are accountability, reconciliation, monitoring etc.which helps to bring down these errors if properly implemented.
In any organisation several cash transactions take place everyday such as petty cash expenses, travellers pay, cash sales, cash purchases, daily wage payments, etc.
Yes, iit is rightly said as cash is the liquid asset and easy to hide to commit fraud because if there are no transactions made for the cash items mainly in infow of cash there are many chances to hide i t and cannot be easily traced as it was not entered or accounted for.
Some of the red flags would be inventory, staff management, policies followed by management, etc.
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